Credit From left: Craig Ruttle/Associated Press; Robert F. Bukaty/Associated Press; Adrees Latif/Reuters
It used to be that money managers and entrepreneurs charged with a crime or civil securities fraud would keep their mouths shut and routinely refer any questions to their lawyers.
But in the age of social media, those days are gone. For some media-savvy defendants there is a new script: They jump on Twitter to tell the world they are innocent, even though lawyers think doing so is a terrible â and legally risky â idea.
Two days after the pharmaceutical executive Martin Shkreli was arraigned on federal securities fraud charges, which accused him of defrauding investors in his former hedge funds and looting a drug company he once ran, he proclaimed his innocence in a Twitter post after pleading not guilty in court.
âI am confident I will prevail,â Mr. Shkreli, 32, wrote to Twitter followers on Saturday. On Tuesday, he wrote, âIâm not a criminal,â in response to a comment on Twitter.
Mr. Shkreli, best known for raising the price of a decades-old drug by 5,000 percent and later paying $ 2 million to buy the only known copy of an album by the rap group Wu-Tang Clan, has tried to present a carefree attitude online since his arrest on Thursday.
He has also posted streaming videos of himself on YouTube sitting at his computer â combing his hair, playing chess and strumming a guitar â and responding to comments from his supporters as if the possibility of going to prison were just a bump in the road.
Last spring, Lynn Tilton, a private equity executive, embarked on a similar public relations strategy after federal securities regulators filed a civil lawsuit that charged her with defrauding investors in distressed-debt securities managed by her firm, Patriarch Partners.
Ms. Tilton, 56, posted a video online defending herself and denying the charges and later used Twitter to attack the Securities and Exchange Commissionâs decision to bring her case before an administrative law judge, as opposed to filing the matter in federal court.
And in a twist on the strategy, Charlie Shrem, an early proponent of the digital currency Bitcoin and chief of the money exchange service BitInstant, gave a speech via Skype to a Bitcoin conference while under house arrest before he pleaded guilty in 2014 to aiding and abetting the operation of an unlicensed money transmitting business. Mr. Shrem, 26, has continued to post on Twitter, with the assistance of some friends, from federal prison.
His Twitter profile describes him as âBitcoin pioneer & first felon.â In April, shortly after beginning to serve his two-year sentence, Mr. Shrem posted, âIâm in prison for a victimless crimeâ and invited people to write to him.
It is a kind of do-it-yourself defense strategy for those naturally disposed to a certain amount of vanity and self-absorption, experts say. And it is gaining favor even though defense lawyers have counseled against it and warned that the strategy could backfire because some things defendants say can be used against them at trial or sentencing.
Dealing with outspoken clients has become increasingly normal, lawyers say, especially as many of these clients have cultivated online personas that extend beyond their day jobs.
Gregory Morvillo, a lawyer who specializes in representing white-collar defendants, says having a client who posts on Twitter is a ârecipe for disaster.â
âI am generally averse to my clients going out and speaking publicly, but the reality is there has been a seismic shift in how we communicate,â said Mr. Morvillo, who represented Anthony Chiasson, a hedge fund manager whose conviction on insider trading charges was overturned by an appellate court.
Joshua B. Newman, a New York entrepreneur charged in a criminal complaint by federal prosecutors with defrauding investors in a number of CrossFit training ventures, has referred on Twitter to having seen âbetter daysâ and quoted Abraham Lincoln saying, âFolks with no vices have very few virtues.â The case is still pending.
Recently, Mr. Newman, 36, started a new online fitness training venture that makes no mention of the fraud charges against him but talks about the favorable media coverage he has received over the years.
Priya Chaudhry, Mr. Newmanâs lawyer, said in a statement, âWe encourage our clients to right their ships quickly and permanently, so they can return to good, productive lives.â
This new era of defiance on social media has led to the unusual situation in which the person charged with wrongdoing is the one doing the talking, while the lawyer is often the one to say no comment. That has been the case with Mr. Shkreliâs lawyers at the big law firm Arnold & Porter, which has repeatedly declined to comment on the charges against Mr. Shkreli.
Marc A. Agnifilo, the lawyer who represented Mr. Shrem, said that for clients who take to social media to defend themselves it âcan feel good at the time,â but it has the potential to undermine plea negotiations that might be taking place.
âWe are in the age of oversharing,â Mr. Agnifilo said.
Mr. Agnifilo and Mr. Morvillo both said they could imagine a situation in which they might be forced to let go of a client who did not heed advice and said too much about a case on Twitter or other social media forums.
Legal experts say they are less concerned about a person facing civil fraud charges, like Ms. Tilton, speaking out on Twitter since there is no risk of jail time.
Denise Shull, a former trader at the Chicago Mercantile Exchange and a coach to Wall Street money managers, said there was an element of narcissism behind the social media defense.
âIf youâve already displayed attention-seeking behavior, the chances are youâre going to continue along that path if you can,â Ms. Shull said.
In the case of Ms. Tilton, being in the public eye is not new. She has cultivated an image that plays on her role as a powerful executive in the male-dominated private equity industry. âItâs only men I strip and flip,â she said in the pilot for a reality television show about her life called âThe Diva of Distressed.â
Ms. Tilton has contested allegations by the S.E.C. that she breached her fiduciary duty to clients by failing to properly value the assets of distressed companies in some portfolios, allowing her to collect as much as $ 200 million in management fees. Ms. Tilton released a video called âFight Like a Girlâ soon after the S.E.C. brought its complaint.
She filed a countersuit against the S.E.C., and the agencyâs case has been stayed by a federal appeals court while it considers the legality of regulatorsâ decision to proceed with the matter before an administrative law judge.
In a statement, Ms. Tilton said social media gave her the best forum to speak directly to the public. âSocial media has provided me the medium to best reflect my ideas, my business and me in my own words and images,â Ms. Tilton said.
Other defendants, such as Mark Cuban, the billionaire businessman, reality TV show star and owner of the Dallas Mavericks basketball team, have frequently used social media to jab at the S.E.C. He has gone after the regulator on Twitter several times since a Dallas jury cleared him of federal insider trading charges in October 2013.
As for Mr. Shkreli, the streaming videos appear to be one way for him to keep his relevance and the degree of fame he has found since defending the decision by Turing Pharmaceuticals, which he ran, to raise the price of a critical drug to $ 750 a pill from about $ 13. Turing fired Mr. Shkreli after his arrest, giving him more time to produce the videos from his Midtown Manhattan apartment.
âA small bit of it is, âIâm going to try to win this P.R. battle,â â Ms. Shull said of Mr. Shkreliâs tactics. âBut to go on and on? That would suggest that he is petrified.â
In one video, Mr. Shkreli spends time removing some of the critical and profane comments viewers posted online about him. He also takes time out to answer a question about why he is making the videos, saying, âI am doing this to mostly relax.â